Hayek’s Road to Serfdom: Despotism Then and Now

“Every economy has its contradictions …. What counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth.” ~ Paul Samuelson, Economics, 1985 edition

“Contrary to what many skeptics had earlier believed, the Soviet economy is proof that … a socialist command economy can function and even thrive.” ~ Paul Samuelson, Economics, 1989 edition

When Friedrich A. Hayek published his classic book, The Road to Serfdom, in 1944 he was loudly denounced by academic statist apologists in England, where he resided at the time, and in America. In the preface to the 1976 edition of the book Hayek noted that a prominent philosopher even denounced the book despite admitting that he had not read it! But average citizens did read it. The book was a gigantic success in America, quickly selling over half a million copies. Millions of copies of a condensed Reader’s Digest version of the book were also sold and widely read.

The court historians in academe were not concerned about Hayek’s age-old warnings about the dangers that centralized political power posed to liberty and prosperity, for they intended to be beneficiaries of that power as well-paid advisers to the state. Millions of average citizens were not as enthusiastic, especially Americans who, during the war, had experienced oppressive and confiscatory taxation, the slavery of military conscription, government-imposed product rationing, pervasive shortages of basic staples, and endless bureaucratic bungling.

Hayek’s motivation for writing The Road to Serfdom was the shocking speed at which so many Europeans – especially in Germany – had simply forgotten all that they had learned over the centuries about the virtues of a free society, the need for limitations on government power, the dangers of centralized power, and the workings of capitalism as a worldwide network of mutually advantageous exchange. It only took a couple of decades of socialistic sloganeering to persuade Germans to abandon their classical-liberal roots and embrace Big Government of the worst sort.

Hayek was deeply concerned that the same despotic ideas were also becoming more and more popular in England, America, and in other countries. As the above quotations of MIT’s Paul Samuelson demonstrate, much of America’s educational “elite” was enamored with Soviet communism and central planning. Samuelson even went so far as to say in his textbook, which was by far the biggest seller of its day, that “it is a vulgar mistake to think most people in Eastern Europe [during communism] are miserable.”

The parallels to today’s world are unsettling, to say the least. Perhaps this is why, a few weeks ago, The Road to Serfdom ascended to #1 in sales on Amazon.com after Glenn Beck discussed the book on his Fox News Channel program. There may not be a Hitler on the horizon, but the extent to which governments all over the world have simply ignored the lessons of the past in response to the economic crisis that they created with their own monetary policies and other interventions is mind-boggling. The US government, in particular, responded to the bust portion of the Greenspan Fed’s boom-and-bust cycle with the most economically destructive – but politically centralizing – policies: trillion-dollar bailouts of failing corporations that will create moral-hazard problems the likes of which have never been seen; an escalation of the money supply that dwarfs the monetary inflation of the Greenspan Fed; the Soviet-style nationalization of automobile companies, banks, and much of the healthcare industry; government regulation of executive compensation; the appointment of dozens of dictatorial “czars” with unaccountable power to regulate and regiment myriad industries; trillion-dollar-a-year deficits; an expansion of the powers of the Fed (!); and a president who believes he has the power to fire corporate executives, nationalize industries, and send unmanned “drone” bombers to any country in the world on a whim.

Washington DC no longer recognizes any limits at all to its powers to “socially plan” all aspects of American life. This totalitarian impulse is not limited to national politics. The mayor of New York City believes he has the power to regulate all of the eating and drinking habits of New Yorkers, even including how much salt they consume with their meals and what type of soft drinks they can enjoy.

The subtitle of the 1976 edition of The Road to Serfdom, published by the University of Chicago Press, is “A Classic Warning Against the Dangers to Freedom Inherent in Social Planning.” The exponential explosion of governmental powers in response to the current, government-generated economic crisis makes The Road to Serfdom as relevant today as it ever was (as Glenn Beck’s audience instinctively understands). This is why the Mises Institute is offering a special five-week online class, The Road to Serfdom: Despotism Then and Now, under my direction through the Mises Academy, beginning on Monday, July 5. The course will be an in-depth examination and discussion of Hayek’s analysis, its relevance to today’s world, and how such ideas can be used to put America – and other parts of the world – back on the road to freedom.

Hayek’s insights were remarkable, and remain so to this day. He understood and explained the power of ideas: European fascism could never have been adopted without a 25-year propaganda campaign against individualism (basic respect for the individual), classical liberalism, and free-market economics. He pointed out the “fatal conceit” of believing that government bureaucrats could “plan” an entire society. He explained why socialism – including its fascist variant – meant little more than “equality in restraint and servitude.” “Marxism has led to Fascism and National Socialism,” he wrote, “because, in all its essentials, it is Fascism and National Socialism [i.e., Nazism].”

Hayek saw through all the rhetorical tricks and gimmicks of the socialists of his day, one of which was the constantly repeated refrain that socialism and government “planning” was “inevitable”; therefore, it is futile to oppose it. Nor did he fall for the gimmick of wrapping totalitarian socialism in the mantle of the god of democracy. Government planning is inherently incompatible with both democracy and the rule of law in the long run, he explained, and leads to some degree of economic dictatorship. Any business person who has had to deal with the dozens of federal, state, and local government regulatory agencies knows that “economic dictatorship” is a key feature of the current American political system.

“The worst” always rise to the top of the political heap under a regime of government planning, Hayek explained, for they are the ones with the least qualms about brutalizing their fellow citizens and depriving them of their liberties. All of this can only be sustained by what Hayek called “The End of Truth,” or the effects of massive government propaganda that demonizes the civil society, individualism, and the system of peaceful voluntary exchange and private property (capitalism), while glorifying all aspects of the state.

The purpose of this course, The Road to Serfdom: Despotism Then and Now, is to educate students about these contemporary dangers and arm them with the intellectual ammunition that they will need to oppose them and champion freedom instead. The totalitarian socialists of the early 20th century understood that they could not succeed unless they first discredited the ideas of freedom. The only way to stop their intellectual descendants (“the totalitarians in our midst,” as Hayek would call them) is to counter their totalitarian ideas. Hayek was a hero of society for putting his career as a renowned economic theorist on hold (for most of the rest of his life, it turned out) to lay out one of the most articulate arguments for a free society ever made. We must revisit and strengthen these arguments if we are to choose capitalism and freedom over socialism and serfdom.